President Obama said the bloodshed in Libya was "outrageous and unacceptable," but he declined to directly censure Libyan leader Col. Moammar Gadhafi who has been blamed for much of the violent crackdown.

"The suffering and bloodshed is outrageous and it is unacceptable, so are threats and orders to shoot peaceful protesters," Obama said in his first televised remarks on the situation in Libya. "These actions violate international norms and every standard of common decency. This violence must stop."

The president said the Libyan government "has a strong responsibility to refrain from violence" and that it must be held accountable, but he stopped short of placing the blame on Gadhafi, Libya's eccentric dictator who has ruled for 42 years.

Obama said his staff will work with the international community to discuss the volatile situation and the administration is "doing everything we can to protect American citizens," calling it his "highest priority."

The uprising that began over the weekend has divided the country.

Libyan rebels in the eastern part of the country demanding Gadhafi's ouster claim to have taken control of another city and are sending weapons and manpower to Gadhafi's opponents in the capital of Tripoli where a brutal war is reportedly being waged by mercenaries who are terrorizing protesters.

Gadhafi's opponents claimed to have taken over the city of Misrata, which would be the furthest west -- and closest to Tripoli -- that the rebels have taken.

In the city of Benghazi, where the insurrection began, a resident told ABC News that the city was secure and under civilian and police control.

"Benghazi is in the hands of the people now. And actually all of the eastern parts of Libya is under the protesters' hands," said the resident who asked not to be identified. "In the meantime, we've managed to send weapons and people to support the people in Tripoli against the militias that Gadhafi is using. We've managed to send a few rifles and guns."

The U.K.'s Guardian newspaper, the first to have a reporter in the region, described a similar scene in eastern Libya with the police taking over the day-to-day functions of the city.

Tripoli, however, remains a city under siege.

Italy's foreign minister Franco Frattini said today that estimates of a 1,000 people killed in the violence appeared to be credible, but he added that he didn't have complete information. Human Rights Watch pegs the number of deaths at around 300. With the country virtually sealed off, it has been impossible to confirm casualties, but footage being leaked on the Internet shows a violent picture.

Eyewitnesses describe a bloody scene unfolding in the streets of Tripoli, the nation's capital, with African mercenaries recruited and trained by Gadhafi killing indiscriminately, shooting anyone in sight.

"A woman went looking out the balcony of her house. They shot her dead, looking out of the balcony. She wasn't shouting, she wasn't even protesting. Just looking out of the balcony. They shot her dead," one resident, crying, told ABC News by phone. "These are not humans. These are gorillas."

Throughout the night, gunfire rang out as residents hunkered down in their homes.

Time Magazine reported that Gadhafi, who has controlled the country for 42 years, had ordered his security forces to sabotage oil facilities and start blowing up oil pipelines to cut off flows to ports in the Mediterranean.

The uprising in Libya has rattled oil markets. Crude oil prices closed at the highest level in two years on Tuesday as the uprising threatened to disrupt exports. Libya, an OPEC member, is the 17th largest oil producer in the world, producing 1.7 million barrels per day.

In nearly an hour-long, often rambling speech Tuesday, an angry Gadhafi vowed to fight to his "last drop of blood," blamed the protests on foreigners and "rats," and said he would unleash a massive crackdown if protesters don't back down.

The violent clashes in Libya in the past week between security forces and protesters have many people scrambling to leave Libya.

Even Gadhafi's own daughter was reportedly trying to leave the country. Italian news agency Ansa and Malta Today said that a Libyan Airlines flight -- with Aisha Gadhafi reportedly on board -- attempted to land in Malta today but was turned back to Tripoli.

Aisha Gadhafi later appeared on Libyan state TV and denied the reports.

Foreigners Leave Libya

The U.S. State Department was attempting to evacuate Americans out of the capital of Tripoli by ferry to the nearby island of Malta today, but the ferry could not leave because of turbulent weather.

Earlier today, Secretary of State Hillary Clinton said the United States is evaluating all options to pressure Libya to end the violence and influence the government.

In an interview, Defense Secretary Robert Gates said the United States could not quickly enforce a no-fly zone over Libya -- a plea many protesters and dissenters have made -- and that Italy and France would be better poised for that.

U.S. oil sector workers might potentially be stranded in many remote parts of the North African country, according to various media reports. The British government estimates that up to 170 of their nationals working for oil companies in remote, isolated, desert camps are stranded and that some of the camps have been subjected to attacks and looting.

"They are in a perilous and frightening situation," U.K. Foreign Secretary William Hague said. "All of us are conscious that the situation in Libya is very different from that we faced in Tunisia or Egypt. ... In Libya, what is happening is civil strife: a country split geographically in two, split between government and people, and with widespread breakdown of law and order."

Several oil and gas companies have said in recent days that they were in the process of activating emergency plans to repatriate their staffs, a process that will take a few days.

At the Saloum border crossing on Libya's eastern border with Egypt, chaos erupted as a non-stop stream of Egyptians returned home to escape the violence.

The road leading to the border essentially turned into a parking lot and a line of white vans stretched out into the horizon as far as the eye could see. There were so many cars and people carrying everything from bags of clothes to TVs, doors and washing machines that everyone was stuck.

The Egyptians – mostly migrant workers coming from the second largest city of Benghazi – reported stories of widespread, brutal killings.

A father of six said he had seen fighter jets attacking people and criminals being released into the streets. "It's a war."

Another said he ran into gunmen on his way to the border and had to kiss their feet to pass.

One man told ABC News African mercenaries were everywhere.

"They are killing everyone they meet," he said. "Over there is a slaughterhouse. It's not a joke. It's a slaughterhouse. No one is in Benghazi now. Shooting is everywhere, all shots in the head and the chest."

On the western front with Libya, there was a slightly slower flow of people, with groups of 10 to 20 at a time crossing the border here in Ras Ajdir.

The Tunisian expatriates told ABC News they were leaving both because of the violence -- telling stories of gunfire in the night -- and because of fear that Gadhafi has stirred anger at foreigners in his country.

One worker from Az-Zawiyah in northwest Libya said all symbols of Gadhafi in that town, including pictures and signs, were set on fire. He said there was a lot of gunfire but it was mainly police firing in the air to regain control of the streets.